Sonic reported net income per diluted share of 7 cents, which beat the 6 cents expected by analysts polled by Thomson Reuters. This also marked a slight increase from the 6 cents per diluted share in the same period one year earlier. Excluding adjustments, net income per diluted share increased 40% year over year.
Same-store sales increased 1.4%, which included a 1.5% increase at franchise drive-ins and a 1.3% increase at company drive-ins; company drive-in margins also improved 80 basis points.
Sonic also repurchased approximately $51 million of stock in the quarter, which represents almost 5% of its stock outstanding as of the beginning of the quarter.
"We are very pleased with our second quarter results, especially in light of the difficult weather that impacted many of our markets. Our solid sales and financial performance resulted from multiple system-wide initiatives such as increased media efficiency, innovative products and layered day-part promotions. These initiatives complement our focus on service, products and pricing," said Sonic President, Chairman and CEO Cliff Hudson in a statement. "During the quarter we also began to roll out our technology initiatives, as well as signed new franchise development agreements for the development of 26 new drive-ins."
The stock was up more than 6% to $22.25 in after-market activity on Monday.
TheStreet Ratings team rates SONIC CORP as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate SONIC CORP (SONC) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SONC's revenue growth has slightly outpaced the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 0.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Powered by its strong earnings growth of 27.27% and other important driving factors, this stock has surged by 80.36% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SONC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- SONIC CORP has improved earnings per share by 27.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SONIC CORP increased its bottom line by earning $0.64 versus $0.61 in the prior year. This year, the market expects an improvement in earnings ($0.82 versus $0.64).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Hotels, Restaurants & Leisure industry average. The net income increased by 33.8% when compared to the same quarter one year prior, rising from $6.13 million to $8.21 million.
- Net operating cash flow has significantly increased by 90.10% to $28.06 million when compared to the same quarter last year. In addition, SONIC CORP has also vastly surpassed the industry average cash flow growth rate of -33.04%.
- You can view the full analysis from the report here: SONC Ratings Report